In accordance with new US penalties, derivatives protocol dYdX stated on Thursday morning that it has blocked user accounts that had previously communicated with Tornado Cash.
dYdX added in a blog post that it is working with a “compliance vendor” that flagged certain accounts that had received funds from the Tornado Cash app.
After the US Treasury approved the protocol, Tornado Cash, an Ethereum-based privacy and transaction mixing service, has gained attention recently.
In the blog post, dYdX wrote:
“Many accounts were blocked because a certain portion of the wallet’s funds (in many cases, even immaterial amounts) were associated at some time with Tornado Cash, which was recently added to the sanctions list by the U.S.”
However, the exchange made it clear that numerous accounts had been incorrectly blocked and that this had to be corrected. These users may not have been aware of the source of the money given to them because they hadn’t interacted directly with Tornado Cash, according to dYdX.
“We have made adjustments, within the limits of our compliance policies, that have unbanned certain accounts and we will continue to make efforts to limit flagging and track this issue moving forward,” dYdX added.
dYdX may reject users transfer assets to their platforms from Tornado Cash
Exchanges like dYdX may reject users who attempt to transfer assets to their platforms from Tornado Cash-linked accounts due to compliance requirements. Exchanges are not the only cryptocurrency businesses, though, that have reacted to Tornado’s penalty by taking action. In fact, this event has wider repercussions that are being felt in the crypto industry.
For instance, Tornado Cash users were unable to access Alchemy’s Ethereum infrastructure provider’s nodes. Another instance is when contributors to Tornado’s software had all of their GitHub software repositories erased after their accounts were deleted from the service.
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